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Facebook fails customer satisfaction test

Facebook’s recent privacy issues haven’t put a dent in the social network’s traffic or user levels, but if a new study from ForeSee Results and the American Customer Satisfaction Index has anything to do with it, that might be changing. The study found the social network ranked close to cable companies and airlines in terms of customer satisfaction. And according to Foresee, customer satisfaction is a pretty clear indicator of future corporate success.

Despite ongoing privacy issues, Facebook keeps steamrolling past growth figures. More people than ever log onto the site every day.
Facebook is set to announce reaching 500 million users this week alone. And the site’s U.S. users
climbed to 141.6 million last month, up 84% from a year
earlier, according to comScore. But according to Foresee, the social network scored in the bottom 5% of a customer-satisfaction survey.

Facebook scored 64 out of a 100-point scale, according to a report based on the
American Customer Satisfaction Index, which was developed by the University of Michigan’s business school. That ranks Facebook close to the IRS, airlines and cable companies in terms of customer satisfaction.

Facebook is also doing a lot worse than other digital brands, Google scored an 80 and Yahoo received a 76. Wikipedia.org ranked the highest among
social-media companies, with a score of 77. YouTube got a rating of 73. Only MySpace scored worse than Facebook, with a 63.

Interestingly, privacy wasn’t people’s main concern with using Facebook. More at issue is Facebook’s changing consumer policy, which apparently has disrupted users. Larry Freed, CEO of ForeSee Results, says that Facebook has
undeniable growth and success over the last year. However, “low
satisfaction means you’re starting to put that
growth at risk.”

Foresee uses the ASCI to assess future growth at companies, and the results come from interviews with approximately 70,000 customers annually. According to the study:

“Companies that did well in the ACSI saw their stocks increase by 75% on average in 2009. In contrast, stock prices for those with declining ACSI scores rose 22% over the same period, which is slightly less than the 26% gain for the S&P 500.

Based on surveys of more than 23,000 visitors to the top 100 e-retail websites, our research shows that when compared to a less satisfied visitor, a highly satisfied visitor is 73% more likely to purchase online, 47% more likely to purchase offline, 53% more likely to remain loyal, 72% more likely to recommend, and 66% more likely to be committed to the brand. This finding makes intuitive sense for many business leaders, but the ACSI is able to quantify the impact of a satisfied online shopper on a retailer’s overall business operations.”

Foresee says a big issue at Facebook has been advertising. According to Freed:

”Their monetization strategy is not meeting the expectations of consumers.”

That could be because users who grew accustomed to free site
unencumbered by advertising are not liking the way social sites are starting to populate with different advertising products. According to the study:

“Commercialization of social media sites may be impacting
satisfaction. The strategy of starting out as a free
service with no advertising or revenue source is an effective way
to build traffic and loyalty, as is evidenced across all of these
sites. However, starting out that way also trained customers to
expect an experience on these sites that is relatively unencumbered
by advertising and commercialization.”

And equally troubling is the rankings that digital sites received for product purchases. According to Foresee, only 12% of Facebook users who responded to the survey had purchased products or services recommended to them on the site. The numbers were worse for MySpace (8%) and Wikipedia (10%), and not great for YouTube either (14%).

YouTube and Wkipediea may not be known for product recomendations, but both MySpace and Facebook are trying to position themselves as great places for marketers to spread the word about their products.

As long as Facebook continues to add users, consumer satisfaction may not be the biggest issue. However, Facebook can’t forget the number of formerly popular social networks that no longer exist.

“Building a simple, useful service is the best way to earn and
sustain the trust people put in us. That’s why we spend so much of our
time and energy focused on improving the products we offer and
introducing new ones. We look forward to the next survey.”

For now, there’s one major benefit that Facebook can fall back on to counter these results: None of its competitors are scoring any better.

Facebook recently announced it has hit the major milestone of 500m users, following hot on the heels of the news that, in the US,
the site has overtaken Google for the first time. This is truly
remarkable growth for a site that only launched in 2004.

However, can we judge the effectiveness of Google vs Facebook based
simply on the size of their respective user bases? Should we be
diverting more budget towards Facebook at the expense of search?

Companies are pouring billions of dollars a year into social media and influencer marketing campaigns, many of which target consumers on Facebook-owned Instagram, in an effort to parlay social engagement into sales.